In a unanimous decision, county council approved a service agreement with New Mexico Airlines for commercial air service between Los Alamos and Albuquerque and ratified grant funding that will subsidize the service for nearly three years.

Arin McKenna/Monitor

Airport Manager Peter Soderquist addresses county council Tuesday night as he discusses grant funding for air service to Los Alamos.

In 2012, council approved an earmark of $150,000 from the Economic Development Fund to attract commercial air service. Council Chair Geoff Rodgers praised Airport Manager Peter Soderquist for obtaining grant funding that reduces the county’s contribution for subsidizing the service from an estimated $143,707 to $28,000.

“I want to thank everybody that’s worked to bring that cost down. If we can get scheduled air service in this community for a cost to the county of $28,000, you’ve done a marvelous job. I wish you nothing but success, and I certainly plan to use this,” Rodgers said.

The county’s cost was defrayed by two grants and a contribution, totaling $312,000.

They included:

•$272,000 Small Community Air Service Development Program Grant from the U.S. Department of Transportation

•$25,000 from an Associated New Mexico Department of Transportation Air Service Assistance Program Grant

•$15,000 from the Los Alamos National Laboratory Regional Development Corporation contribution.

The federal grant includes $50,000 for marketing the pilot program. An additional $50,000 from the county’s Economic Development Fund will be used to promote the service. Soderquist considers aggressive marketing a key component in making the service a success.

BFT International, a branding and marketing firm that specializes in marketing airlines, has been hired to conduct the campaign.

A one-way trip to Albuquerque will cost consumers $45.

The nine-seat Cessna 208 (Cessna Caravan) that will be utilized has an operating cost of $367.83 for the flight to Albuquerque. New Mexico Airlines will be subsidized up to $58.80 for each seat sold to meet that operating cost. If the airline sells six seats on a flight, the subsidy will be $97.83.

Soderquist also expects operating costs to be defrayed by air cargo, another service that BFT plans to market aggressively. Having air cargo service available could net other advantages.

“One of the nice features of this is that the cutoff time for FedEx is now later in the day. Rather than close down the operation early in order to meet the seven o’clock flight in Albuquerque, you can actually close FedEx and UPS offices later in the day because you can fly the product down there and be there in 20 minutes,” Soderquist said.

Although the goal is to provide nine flights daily to Albuquerque, with one round trip on Saturday and Sunday, the initial schedule will have just three flights a day until demand increases.

Rodgers expressed concerns that having just three flights could decrease chances of success, since one of the complaints from LANL staff about three failed airline services in the past was that the schedule did not meet their travel needs.

“We’re not going to fill nine flights on day one. And while we’re going to lose the frequency and perhaps lose some customers, at least we started the service,” Soderquist said. “The intention was to look realistically at how many flights we can fill. Because if we fly three flights and we have seven, eight or nine passengers, it only costs us $58 bucks. But if we only have three or four, we start eating into the subsidy money.”

Councilor Rick Reiss approved of a more measured startup.

“I think the longevity of the project is a worthy concern, because frequency is one thing, but always being there is another, and if we burn through it in one year we’ll be confronted again with, will we be able to continue?” Reiss said.

The agreement with New Mexico Airlines has considerable flexibility built into it. If the airline are notified in advance that more than nine seats are needed on a flight or that a group has requested a special air time, the airline will arrange for the additional service.

The contract with the airline also provides for charter flights at a 50 percent savings over the current cost.

Airport staff has strong incentives for increasing the number of flights available. The goal is to reach self-sufficiency by the time grant funding runs out. That would require 22,000 passengers a year with a ticket price of $55.

Once the program reaches 10,000 enplanements in a calendar year it becomes eligible for $1 million in entitlement funds from the FAA Airport and Airway Trust Fund as a Primary Commercial Service Airport. Those funds can be used for airport projects currently eligible for Airport Improvement Program grant funding, including most of the projects being considered in the Airport Master Plan.

Soderquist believes serving 22,000 passengers a year is doable. LANL alone produced 21,844 passengers flying from Albuquerque in 2010. Nearly as many lab employees drive to Albuquerque for business with Sandia National Laboratories, creating a potential market of approximately 40,000 customers.

Visitors to Los Alamos are another potential market. In the late 1980s, when the Department of Energy was still supporting air service, the Los Alamos Airport was the second busiest airport in New Mexico, serving approximately 28,000 passengers a year. Many of those passengers flew into the county for business or pleasure.

The marketing campaign for the new service will get underway Feb. 25. If all goes according to plan, the anticipated launch of air service is April 8.